NSSF eyes reforms to cut wastage

Administration expenses based on 2014 financial statements were higher than what is stipulated in the new Act. PHOTO | FILE 

By ADONIJAH OCHIENG, @aomondi@ke.nationmedia.com

In Summary

• Close to 60 per cent of members' contributions to the National Social Security Fund (NSSF) in 2014 went towards administration costs.
• The expenses include general administration costs and staff salaries which amounted to Sh4.75 billion, representing 56.48 per cent of the Sh8.41 billion collected in 2104.
• NSSF's assets grew to Sh172 billion as at June 2016 on increased membership.

More than half of members' contributions to the National Social Security Fund (NSSF) go towards footing administration costs.

This is according to the pension manager's latest financial statements for the year ended June 2014 that were presented at its annual general meeting (AGM) Friday.

The expenses include general administration costs and staff salaries that amounted to Sh4.75 billion, representing 56.48 per cent of the Sh8.41 billion collected in 2104.

This was a drop from Sh6.34 billion of Sh7.8 billion collected in 2013 from workers contribution.

Section 50 of the NSSF ACT 2013 stipulates that “expenses of administering the Fund shall be paid out of the Fund expenses not exceeding two per cent of the total Fund assets for the administration of the Fund”.

Thus, administration expenses based on 2014 financial statements were higher than what is stipulated in the new Act.

He however said the Fund is set to undergo reforms which will ensure efficiency, noting that NSSF is expected to grow further from the current Sh172 billion in assets as it aims at new investment avenues.

The chairman said the Fund is considering the application of Alternative Dispute Resolution (ADR) to address the stalemate that has led to delays in the implementation of the NSSF Act No. 45 of 2013 that commenced on 10th January 2014.
“This is work in progress and strategies to reach out to the parties in court for a possible friendly resolution has been put in place. This may take some time and requires careful husbandry,” said Ndambuki.

As at June 2014, NSSF net assets stood at Sh153.03 billion, representing an 11.14 per cent increase from 2013.

It's net assets further grew to Sh172 billion as at June 2016 on increased membership